The annual capital gains tax exemption for 2014/15 is £11,000. This means that any capital gain less than or equal to £11,000 is exempt from Capital Gains Tax. However this allowance could not be carried forwarded.

I will now explain with an example how to efficiently use your annual CGT exemption.

You are a strong believer in investing in shares and have a significant shares portfolio. You are also a higher rate tax payer, which means any disposal of shares, over annual CGT, will attract a capital gains tax at 28%. You now want to sell your entire shares portfolio that could result in a gain of £54,000. The capital gains tax on it without any tax planning will be £12,040.

However you chose to discuss this beforehand with your accountant, who advised you to sell enough shares, every year, to only realise a gain of £11,000 per year (or realise the gain equivalent to annual CGT exemption for the future years if different than £11,000). This means that you could still have your gain of £54,000 spread over five years but saved yourself a massive sum of £12,040.